Moving Expenses
If you relocate to start a new job or a new position with the same employer, you may be able to deduct some of your moving costs from your taxable income.
In order for moving expenses to be deductible, your new residence must be at least 40 kilometres closer to your new place of employment. However, if your employer pays for some of your moving expenses, you cannot claim those expenses.
Moving expenses are deductible only from a taxpayer’s net earnings at the new location. So if you move later in the year, and only earn a few weeks of income at your new job then you may find your deductions are limited. However, eligible moving expenses that cannot be deducted in the year of the move may be carried forward and claimed against net earnings from the new location in a subsequent year.
Deductible Moving Expenses
Moving expenses are one of the most reviewed and re-assessed tax deductions so it is important to understand if you qualify and what you can actually claim.
Deductible moving expenses are those listed in the Income Tax Act, and are limited to the following:
- the cost of moving household effects, including packing, hauling, in-transit storage, and insurance costs;
- transportation costs to the new residence for the taxpayer and his or her family including amounts for travel, meals, and lodging en route;
- the cost of temporary lodging and meals for up to 15 days near the former residence and/or the new residence;
- the cost of canceling a lease for the old residence, not including any rent paid while the taxpayer lived there;
- the cost of changing addresses on legal documents, replacing automobile permits and licenses, and utility hook-ups and disconnections;
- up to $5,000 of the amount incurred for interest, property taxes, insurance premiums, heating and utilities required to maintain the former residence after the move, provided it was not being rented or lived in by a household member and reasonable efforts were made to sell it;
- selling costs of the old residence, including real estate commissions, legal or notarial fees, advertising, and mortgage penalty if a mortgage is paid off before maturity; and
- legal fees connected with buying a new home and any taxes paid to register or transfer title to the new residence, but only if the taxpayer or his or her spouse sold the old residence as a result of the move. This deduction is not available to taxpayers acquiring a first residence. “Taxes paid to register or transfer title” do not include the GST/ HST payable on newly built residences.
Non-Deductible Moving Expenses
The items listed below are not deductible as moving expenses:
- pre-move expenses from the old location to the new location for job-hunting, house-hunting, or any other purpose;
- expenses incurred to make the former residence more saleable; and
- any loss on the sale of the old residence.